Strengthening and Streamlining Energy Advice and Redress
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inclusive policy, social development Strengthening and streamlining energy advice and redress An independent review of the adequacy of energy advice and redress – full report Georgia Klein 07939 541 807 [email protected] Section Page 1. Introduction 3 2. Key policy developments 7 3. Consumer needs – current and future 16 4. Definition of adequate energy advice and redress provision 29 5. An assessment of the adequacy of current advice provision 37 6. An assessment of the adequacy of current redress provision 58 7. Proposals for improving provision 75 Appendices and a standalone executive summary are also available at www.citizensadvice.org.uk/knowing-who-can-help Page 2 of 88 Chapter 1 Introduction This chapter sets out the review objectives, the approach taken and the key limitations on the review. The review’s primary objective was to identify the changes needed to the existing regulatory and delivery framework in order to deliver optimal energy advice and redress to domestic consumers (particularly vulnerable consumers) and micro-business consumers in Great Britain. Because the commissioning organisation – the Citizens Advice Service – is itself an advice provider, a number of measures were put in place to ensure the review was robust, objective and independent. Of key importance was the development of an assessment framework, along with the collection of data to evidence performance against this. The review was limited by the non-disclosure of key information to the reviewer and weaknesses in publicly available information, in spite of these services being funded by taxpayers and consumers. Nonetheless, the review: provides a robust evaluation framework that can be applied to help drive future improvements in advice and redress provision in energy as well as other sectors provides a comprehensive, aggregate view of the performance of both energy advice and energy redress in Great Britain; and secures sufficient evidence to indicate the improvements needed to the regulatory and delivery framework to secure adequate energy advice and redress. Page 3 of 88 1.1 Objectives The Consumer Futures team at Citizens Advice and Citizens Advice Scotland wish to work with stakeholders to achieve optimal advice and redress provision for energy consumers in Great Britain. To support them in this goal, they commissioned GK Consulting to: describe all relevant organisations involved in energy advice and redress provision, including details such as: the type of advice/redress provided; use of cross-referrals; volumes of consumers using the services; how consumers’ experiences are captured and reported conduct an independent review of the adequacy of this energy advice and redress provision in the light of current and forecasted future consumer needs, with particular regard to: - potential overlaps, gaps and coordination in provision, capturing differences between England, Scotland and Wales - the needs of domestic, micro-enterprise and vulnerable consumers; and make recommendations regarding the changes needed to the regulatory and delivery framework to deliver improved support for energy consumers. The review exclusively considers provision that is funded by: taxpayers; or consumers as a result of a Government mandate. 1.2 Approach Consumer Futures has previously commissioned other reviews of energy advice and redress provision, the latest being in 2011.1 In order to deliver maximum value for money, this review focuses on key developments since these reviews were completed, taking a different evaluation approach with a greater emphasis on recommended changes. Since previous reviews were completed, Consumer Futures has become part of Citizens Advice and Citizens Advice Scotland (hereafter referred to together as ‘the Citizens Advice Service’) – a policy-influencing organisation and advice provider with commercial interests in the advice environment. Given this context, in order for this work to have credibility with external stakeholders and to obtain the necessary data, it was important to develop an approach that was robust, objective and independent. This entailed the following: 1 Centre for Consumers and Essential Services, University of Leicester (2011), Making the Connection: strengthening the advice, complaint handling and redress framework; Centre for Utility Consumer Law, University of Leicester (2007), Consumer vulnerability and the energy sector: vulnerable consumers and complex complaints. Page 4 of 88 A combination of literature research and asking key providers and stakeholders in the sector to identify the full array of advice and redress organisations in scope for this work. Developing a robust assessment framework from a review of best practice in advice and redress provision. This was used to evaluate current provision and test recommended changes. Relevant organisations were requested to complete a standardised information request; the data requested would serve to objectively determine the performance of individual organisations and also the sector against the assessment framework. Key stakeholders in the sector were interviewed to capture their views on the effectiveness of current sector provision, its fitness for the future and any changes they would recommend (see Appendix 5 for organisations interviewed). Participants’ detailed responses were not shared with the Citizens Advice Service – it only has access to published data. Contributors were asked to verify the accuracy of information about their organisation as it appears in the final report. Contributors also had the opportunity to comment on the conclusions and recommendations in the report. The views expressed are those of GK Consulting based on the evidence acquired, not of Citizens Advice or Citizens Advice Scotland. The research for this report was completed in early March 2015. 1.3 Definitions For the purposes of this project, advice includes first-tier and second-tier advice. First-tier advice often points the way towards further information or answers practical and frequently asked questions. Second-tier is detailed advice for individual consumers about their specific problems. Information and education, including via web channels, are out of scope. Relevant organisations were those that have a primary responsibility for energy. The Financial Services Ombudsman and the three Public Services Ombudsmen serving England, Scotland and Wales will all touch on energy issues. For example, the Financial Services Ombudsman tackles some financial aspects of energy transactions. The Public Service Ombudsmen may capture energy issues if a local authority manages the installation of energy measures. However, because they do not have a primary role in energy, we have not reviewed their work in detail but do acknowledge that they add to the array of organisations that consumers may feasibly need to engage with. Micro-business has a particular legal definition of pertinence to Citizens Advice.2 Consumer Futures also operated with a definition of vulnerable consumers as ‘people who cannot 2 The definition of micro-business is taken from section 12 of the Consumers, Estate Agents and Redress Act 2007 (https://www.ofgem.gov.uk/ofgem-publications/57726/cd-cf-non-dom-discon-vulcon-referral- pathway.pdf) and updates in the The Gas and Electricity Regulated Providers (Redress Scheme) (Amendment) Order 2014. A business with: (a) an annual consumption of (i) electricity of up to 100,000 kwh or (ii) gas of up to 293,000 kwh; or (b) (i) fewer than 10 employees (or their full time equivalent); and (ii) an annual turnover or annual balance sheet total not exceeding €2 million. Page 5 of 88 choose or access essential products and services which are suitable for their needs or cannot do so without disproportionate effort/cost/time’. However, for this project, organisations self-defined these consumer groups as this revealed more about the regulatory and delivery framework’s responses to such groups. 1.4 Limitations In spite of the Citizens Advice Service using its powers under the Consumers, Estate Agents and Redress (CEAR) Act 2007 to request the data for this project, a significant number of organisations were unable to respond as a result of commercial and political sensitivities or time pressures. Protection of commercially sensitive data was offered. It was also not possible to secure interviews with Ofgem or the Scottish or Welsh Governments. The proximity of the work to the general election is likely to have been a contributing factor. The reviewer was required to draw on publicly available information for non-responding providers. As the later sections reveal, the data available in the public domain is, on the whole, quite lean and led to challenges in aggregating or comparing organisations. However, these deficits in publicly available information are themselves an important finding. The requirement for advice or redress provision to be funded by Government or mandated also excludes advice from organisations that sell further goods and services, such as energy efficiency or micro-generation measures. This includes, but goes beyond, Green Deal provision. To achieve a full picture of the adequacy of provision, such types of advice need to be taken into consideration. In spite of these limitations, the review has succeeded in: developing a robust evaluation framework that can be applied to help drive future improvements in advice and redress provision in energy as well as other sectors providing a comprehensive, aggregate view of the performance